Today we are discussing the Furlough and SEISS schemes that are now in operation.
It is a challenging time for many businesses and self-employed individuals.
The virus affects most industries.
Understandably, we see schemes changing, aimed at reopening the economy.
This is having an additional effect on businesses - while some may work towards reopening, many are facing redundancies.
Below we will look at the furlough and SEISS schemes individually.
This started for March 2020 and allows employers to claim 80% of their employee’s wages.
Also included is the employer’s National Insurance liability and the employer’s pension liability.
This scheme is now phasing itself out in stages.
If you want to carry on taking advantage of this scheme, you need to have the employees that you wish to include furloughed on the 10th June 2020.
From 1st July 2020, the scheme is changing to encourage employers to bring staff back to work. After this date you can bring your employees back to work in shifts, or part time. We can claim the hours not worked as before.
This new stage of the scheme closes to new entrants from 30th June. The catch is that employees need to be furloughed for 3 weeks leading up to this date. Any employees you intend to furlough after 30th June, need to be furloughed for the 3 weeks from Monday 10th June.
The claims for furloughed employees up to 30th June, need to be submitted by 31st July.
The tax implication of these grants is that they are effectively “income” declared in your accounts. This means that when you file your accounts, the wages that would be a liability against your profit will be missing since you have received income inline with this liability. This means that the amount you receive in grants will be subject to corporation tax at 19%.
If you need any help with making submissions, or are planning to furlough employees in this second stage of the scheme, please contact us.
Self-Employed Income Support Scheme (SEISS)
The Self-Employed Income Support Scheme (SEISS), is a scheme available for those of you who are self-employed sole traders with your income. I am sure most of you will already have had communication from HMRC relating to this scheme and submitted your claims. Unfortunately, this scheme is one that agents cannot do on your behalf. The individuals need to submit these and deal with HMRC with any issues for these on your own.
The good points of this grant are that, unlike the furlough scheme, you can receive this grant and still continue to work. You can also start a new trade or start any other employment.
To decide if you are eligible, HMRC look at the following criteria:
- traded in the tax year 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
- traded in the tax year 2019 to 2020
- intend to continue to trade in the tax year 2020 to 2021
- carry on a trade which is adversely affected by coronavirus
Other Criteria for SEISS
Some examples given of other criteria that are used (see here for the full article) are listed below:
- you’re unable to work because you are:
- on sick leave because of coronavirus
- have caring responsibilities because of coronavirus
- you’ve had to scale down or pause trading because:
- It interrupts your supply chain
- you have fewer or no customers or clients
- your staff cannot come in to work
Although the grant does not have to be paid back, it is subject to Income tax and self-employed national insurance. This is calculated on the amount you receive.
Although HMRC calculate the amount due to you, and decide your eligibility themselves, you can request them to review their decision by contacting HMRC here.
If you need any help or advice with furlough or SEISS, or any other concerns or issues you might have, contact us today.